Welcome to the self-funding FAQ page.
Click on a question below to see the answer.
With a self-funded health plan, you as the employer pay for your employees’ claims out of your own funds. You act as your own insurance provider. By utilizing a funding arrangement, claims administrator, and stop-loss insurance to protect you from catastrophically high claims, you create and manage YOUR health plan. It puts the control in YOUR hands and not someone else’s. Self-funding improves cash flow by freeing money that is paid to and held by the insurance carrier. You only pay for actual claim expenses and only after they have been incurred. Self-funding brings you claims data and reporting information to use to make better decisions for your business and health plan. Long-term self-funding can be the most cost-effective way to finance your group health plan.
The self-funding advantage works for nearly all sizes of business. Larger employers have long taken advantage of the cost savings. With the new and innovative options and services available, GPS can offer self-funded plans for businesses with at least 25 covered employees on their current plan. And the more employees your company has, the better the economies of scale.
Yes, GPS can assist you with building a plan that matches your current benefit plan design. But one of the hallmarks of self-funding is flexibility with your benefits. You can tailor your plan to fit the needs of your employees and your company. The end result—a plan that truly meets YOUR needs.
Yes! Some ACA mandates can be avoided such as being forced to have an ACA plan, a metal plan, and essential benefits. Better yet, ERISA is the governing authority and creates uniform federal laws exempt from conflicting state mandates regarding coverage. You don’t have to pay for state-mandated benefits you don’t need. There are also direct cost savings to you because by self-funding your plan, you avoid several ACA fees, including the Health Insurers Fee, the Section 332 Assessment Fee, and the Solvency Reserve Charge, which can add more than 7% to the premium.
There are plan models that use the fixed payment approach to keep your plan running smoothly and allow for ease of budgeting. The amount you deposit into your claim account is a premium equivalent and will satisfy the plan funding requirements. If a surplus occurs, YOU retain the balance of the account at the end of the year.
While plan design and plan model are fundamental parts, stop-loss insurance is secured to protect you from catastrophically high claims. With the right plan design, claims administrator, and stop-loss coverage, a single claim bankrupting your plan can be mitigated. It is always good to know that when you decide to adopt a self-funded plan, you do so with the right guidance and information to make sure the timing is good and the potential claim experience is known as much as possible.
You own YOUR surplus. A surplus results if actual annual claim expenses are lower than estimated. You only pay for what you use. If your claims are less than the target, YOU keep the surplus.
You, as the plan sponsor, own YOUR claim data. The data includes what, where, and how your plan dollars are spent. This enables you to compare current performance against historical data and national benchmarks. Analyzing and managing cost utilization is a key benefit of self-funding that allows employers to better manage their health care costs.